South Korean company, LG Chem Ltd., is looking to ensure a stable and self-sufficient global supply chain for the raw materials used in electric vehicle (EV) batteries. The firm, which is the parent of LG Energy Solution, the world’s second-largest battery cell maker and supplier to major automakers, is prioritizing securing supply over price.
“Our first and foremost priority is to secure enough raw material for the future,” stated LG Chem CEO, Shin Hak-cheol. To this end, LG Chem is exploring potential partnerships and investments in mining companies, though Shin confirmed the firm will not become a mining company itself.
See also: LG Chem invests more than $3 billion to build Tennessee plant to make battery cathode
The fragility of the EV industry’s supply chain has been intensified by recent major global events, such as the Covid pandemic, driving up the cost of raw materials including metals such as lithium, nickel, cobalt, and manganese, all of which are used in EV batteries. While the price of lithium has declined 13% this year, it remains at high levels, having increased 87% in 2020 and 430% in 2021.
When asked about the US Inflation Reduction Act, which aims to reduce the industry’s reliance on China for supplies, Shin stated that more clarity was needed and that the industry is waiting for further details, expected to emerge before the end of March.
“Different elements and components need clarification,” he said, adding that the situation in the US is probably receiving a disproportionate share of attention. Shin emphasized that LG Chem’s global supply chain strategy is to be self-sufficient in three mega regions worldwide and that the company’s strategy would not be based on any one country’s policy.
See also: LG Chem develops new product to prevent fire in EVs battery
LG Chem shares have risen 12% this year, despite missing analysts’ estimates in its fourth-quarter results, which showed a $131 million operating loss in its petrochemicals operations. Despite this setback, the company’s shares have gained 54% from a low in March last year. In the face of competition from established producers expanding capacity, LG Chem is looking to reduce its carbon content and move toward higher value applications by investing in sustainable materials such as biodegradable plastics.
